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Wisconsin loses $206M by not fully expanding BadgerCare

By Patrick MarleyMilwaukee Journal Sentinel

Posted:
08/17/2014 12:01:00 AM CDT

Updated:
08/17/2014 05:28:18 PM CDT

MADISON -- Wisconsin taxpayers would have saved $206 million over two years -- 73 percent more than estimated -- if officials had fully expanded its main health care program for the poor under the federal Affordable Care Act, a new nonpartisan report shows.

If officials decide to change course and expand the program in the next state budget, state taxpayers would save another $261 million to $315 million through June 2017, according to the Legislative Fiscal Bureau. The bureau serves the Legislature and is widely respected by lawmakers from both sides of the aisle.

In all, the state could have saved more than $500 million over 3-1/2 years, the report shows. That would have allowed Gov. Scott Walker and legislators to put more money toward schools or roads or cut taxes more deeply than they did over the last year.

In addition to saving state funds, the full expansion would have served an estimated 87,000 more adults each month under BadgerCare Plus, according to the fiscal bureau.

The program provides better coverage for people with low incomes -- and at a lower cost -- than the subsidized health plans sold on the federal marketplaces set up under the Affordable Care Act.

The new figures reassert one of the chief differences between the GOP governor and his Democratic opponent, former Trek Bicycle Corp. executive Mary Burke.

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Burke said the new numbers highlight the need to expand BadgerCare, while Walker said he would not do so because he didn't believe the federal government would follow through with funding promises that are written into law.

The potential savings are available because of an Obamacare provision that requires the federal government to pick up the full cost of people newly coming into Medicaid programs like BadgerCare who earn up to 133 percent of the federal poverty level.

FEDERAL AID AVAILABLE

Having the federal government pay the full cost of those BadgerCare recipients provides a big break for the state. Normally, BadgerCare costs are shared, with the federal government paying about 60% and the state paying about 40 percent.

Under a full expansion, the amount the federal government would pay for the new enrollees would gradually decline from 100 percent now to 90 percent in 2020 and beyond. While the rate would go down, it would still be far above the 60 percent the federal government pays for other BadgerCare enrollees, including those gaining coverage under Walker's plan.

Last year, Walker and Republicans who control the Legislature rejected fully expanding BadgerCare and instead opted for a partial expansion. Under Walker's plan, about 63,000 people were dropped from BadgerCare, while roughly 97,500 were added to it. That's a net increase of about 34,500 people.

Those dropped from the program were members of families above the federal poverty designation, and they were to sign up for subsidized private health care through the insurance marketplaces set up under Obamacare. Those added were adults living in poverty who don't have dependent children.

In a statement, Burke said Walker was fiscally reckless for not making BadgerCare more widely available considering the state would save money by doing so.

"In the business world, CEOs get fired for decisions like that," her statement said. "As governor, I'm going to put common sense before politics. Governor Walker's politics-first approach has left Wisconsin taxpayers paying the price."

But in comments to reporters Friday in Platteville, Walker said he was undeterred by the report and sticking by his BadgerCare plan. He said he didn't believe the federal government would provide the funding it has promised.

"We haven't exposed our taxpayers to something I think eventually is going to happen and that we've started to see in other states," he said. "And that is the promises they talk about under the Affordable Care Act, under Obamacare, not coming through. ... We believe confidently going forward this federal government is likely to renege from its promises on Medicaid to the states. And we won't be exposed to that.

"So they can talk about hypotheticals. We believe in the end the track record of the federal government has been to pull away from their commitments to the states."

Democrats counter that the federal government's commitment is anything but hypothetical. Congress and the president would have to reach an agreement to change funding levels, and President Barack Obama has stood steadfastly behind the legislation named after him.

SAVINGS FIGURE GROWS

When Republicans rejected the full BadgerCare expansion last year, the Legislative Fiscal Bureau estimated the decision would cost state taxpayers $119 million over two years.

In its new report, the bureau recalculated the lost savings based on up-to-date enrollment figures and benefit costs. It determined a full expansion of BadgerCare would have cost $355 million more than Walker's plan, but would have drawn $561 in additional federal aid -- thus saving $206 million in state taxpayer money.

The savings are higher than initially estimated mainly because more childless adults signed up for BadgerCare than expected, the fiscal bureau wrote. Coverage for those individuals would have been entirely paid by the federal government if the state had fully expanded the program.

If the state decides to accept the federal money available under the Affordable Care Act and fully expand BadgerCare in January 2016, the state would save $261 million to $315 million over 18 months, the report found. The bureau provided a range because the actual savings would depend on how many people were enrolled in BadgerCare.

AHEAD IN LONG RUN

The savings would diminish over time because the federal government would eventually pay 90 percent of the cost of covering those individuals, rather than 100 percent. The state would nonetheless come out ahead in the long run, the fiscal bureau found.

"Even in years where the state is responsible for a portion of the cost of childless adults, a full expansion would result in annual (general fund) savings and increased federal costs compared to current law," the report said.

The report was released Tuesday to Sen. Jennifer Shilling (D-La Crosse), who requested it. She distributed it to news outlets on Friday on the condition that they not report on it until Sunday.

Under Walker's plan, BadgerCare is available to adults making up to $11,670 and couples making up to $15,730. Children and pregnant women are not affected by the plan and are eligible for BadgerCare Plus at much higher income levels.

The full expansion would make BadgerCare available to adults making somewhat higher incomes -- $15,521 for an individual and $20,921 for couples.